BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

1. Summary1 On October 31, 2007, the utilities jointly filed a Petition for Modification of D.07-09-043 (Joint Petition). They filed an amendment to this Joint Petition on November 7, 2007, making minor corrections to the manner in which they had described the adopted shareholder incentive mechanism in their Joint Petition. Today’s decision approves the amended Joint Petition, with modifications. While we adopt the utilities’ requested changes to the true-up provisions adopted in D.07-09-043, we reject their recommendation to retain the hold-back amount adopted in that decision for the interim claims. Instead, we increase that amount from 30% to 35% in order to mitigate the risk to ratepayer of earnings overpayment. In response to comments, we also clarify the sources of ex ante load impact estimates that we will use to calculate the interim incentives for the 2006-2008 program cycle.